Pramerica leases 15,000 m2 Paris office to French cosmetics firm

Pramerica Real Estate Investors has signed up French cosmetics firm Sephora as the new tenant for a 15,000 m2 office building in Paris it acquired in the summer.

Pramerica bought the vacant property at 41 Rue Ybry, in Neuilly-sur-Seine, in July in an off-market transaction. German media reported the value of the deal was €110 mln.

Pramerica has signed Sephora to a 10.5-year green lease and is undertaking a bespoke asset refurbishment which is due to be completed in spring 2017. The office will serve as the LVMH-owned retailer’s global headquarters.

The building was acquired from a fund managed by Hamburg-based asset manager Paribus after the previous owner Wölbern Invest went bankrupt in 2012. Ernst & Young, the previous tenant, moved out in 2014.

Raimondo Amabile, head of Europe for Pramerica, said the acquisition fitted well with the company’s strategy ‘to reposition assets in mature European markets where we can deliver compelling investment opportunities to our investors and create significant value through tailor-made asset management.’

‘What we see in continental Europe right now is a large opportunity to deliver value-add, driven by lack of good quality supply,’ Amabile told PropertyEU. ‘This creates the opportunity to achieve rental growth even where the economy isn’t going especially well.’

Pramerica made enquiries about the building after Ernst & Young’s departure and spent five months working with the lender and the sponsor, a German fund in liquidation, to secure the deal, Amabile said.

‘The complicated situation gave us the chance to acquire the building off-market. This is an example of how when if you have a very strong team on the ground, understand the dynamics and can see the opportunity when a tenant moves out, you can be more comfortable taking on the leasing risk and moving very quickly.’

Amabile pointed out that Paris, as Europe’s largest office market, is well suited to such acquisitions as it contains a high number of assets which were bought before the crisis but no longer fit their owners’ investment strategies. Wölbern Invest acquired 41 Rue Ibry in 2006 for a reported €138.4 mln.

‘Since 2013 we’ve been focusing more and more on value-add, trying to extract value from solid real estate assets in the right location which have the potential to become core assets after refurbishment. This transaction illustrates our commitment to delivering the best risk-adjusted value to our institutional investors in Europe,’ Amabile said.